According to the Quantity Equation,the Price Level Would Change Less

question 179

Multiple Choice

According to the quantity equation,the price level would change less than proportionately with a rise in the money supply if there were also

• A)either a rise in output or a rise in the rate at which money changes hands.
• B)either a rise in output or a fall in the rate at which money changes hands.
• C)either a fall in output or a rise in the rate at which money changes hands.
• D)either a fall in output or a fall in the rate at which money changes hands.

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Definitions:

Real Return

The yield on an investment once inflation adjustments have been made.

Nominal Return

The amount of profit or loss on an investment before adjusting for factors like inflation, representing the raw financial outcome.

Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and, subsequently, eroding purchasing power.

Bondholders

Individuals or entities that hold the debt securities issued by corporations or governments, entitled to receive the bond's interest payments and the return of principal.